Pilgrim Baxter Founders Resign

November 13, 2003 (PLANSPONSOR.com) - The founders of Pilgrim Baxter & Associates, the mutual fund arm of South Africa's biggest insurer Old Mutual Plc, have resigned.

Harold Baxter, chairman and chief executive of Pilgrim Baxter & Associates, and Gary Pilgrim have both given up their post at the mutual fund firm they started in 1982.   The moves came after an internal probe raised questions about investments made by Pilgrim, according to a Reuters report.

The probe focused on investments made by Pilgrim into a private investment limited partnership that, with Baxter’s knowledge, bought and sold shares in Pilgrim Baxter funds between March 2000 and December 2001.   “(The) review has brought into focus conduct that was not, in our view, consistent with the highest standards of professional behavior ,” David Bullock, who has taken over as Pilgrim Baxter chief executive, said in a statement.   Bullock joined Pilgrim Baxter in July as president and chief operating officer from Transamerica Capital Inc.

Old Mutual, which bought the firm in 2000 (See  Old Mutual Closes UAM Acquisition ), said it would pay Baxter and Pilgrim $58.3 million due to them under an earlier agreement, minus an early-payment discount, and a further payment of $11 million for their holdings in the firm. Old Mutual said it would not pay compensation to the men for leaving their jobs.

Scott Parker, CEO of Old Mutual Asset Management, of which Pilgrim Baxter is a part, has replaced Baxter as chairman of the firm.